Like most traditional bookshops, the Blackwell chain has been squeezed by online stores and supermarkets. Photograph: Oli Scarff/Getty Images

The privately owned book chain Blackwell has outlined plans to copy the way that the John Lewis department store does business – and hand ownership of the company over to its 900 staff.

The 130-year-old academic books specialist is closing down its Oxford head office and relocating staff to work in the stores. Toby Blackwell, the current owner of the business, is setting up an employee partnership, following the John Lewis model, that will hand control of the company to the staff.

Blackwell said he was determined that the company founded by his great-grandfather would remain independent and wanted to harness the "unrivalled specialist knowledge" of his booksellers to ensure the future of the retailer.

He added: "I believe that every single one of our people is important, and can, if respected and encouraged, contribute ideas to make Blackwell's more efficient and innovative. I have therefore decided to emulate the highly successful John Lewis – and Waitrose – share partnership structure for Blackwell's. I have been studying this in detail and practice."

The John Lewis department store and Waitrose supermarket businesses – the biggest employee-owned group in the UK, which pays an annual bonus to all staff out of profits – have proved far more resilient than many other businesses through the recession, and have outperformed most of their high-street rivals.

A spokesman for Blackwell said he had met John Lewis executives to develop his idea for the family books firm and hoped to announce the details of the new constitution in the new year.

Blackwell's decision comes at a time when traditional booksellers are being squeezed by online stores and supermarkets and as electronic reading devices, such as Sony's e-reader and Amazon's Kindle, are rapidly growing in popularity. Borders closed down in Britain last year, while the music group HMV, the owner of Waterstone's, is facing pressure to sell the underperforming bookseller.

Blackwell's decision to hand the company to its staff comes after several years of losses. However, the retailer is expecting to move back into the black later this year. Axing the head office is part of a cost-cutting strategy to achieve that target. Some 25 staff will be made redundant rather than relocated to shops.

Blackwell, like John Lewis, traces its history back to the 19th century. The first shop, on Oxford's Broad Street, was opened in 1879 by Benjamin Henry Blackwell. It measured just 12 foot square, (13 sq metres) but rapidly expanded into nearby shops. Basil Blackwell, the founder's son, joined the family firm in 1913 and focused on expanding its book publishing. In 1915 it published JRR Tolkien's first poem, Goblin Feet.

In the 1990s the business expanded, opening a large shop on London's Charing Cross Road and was the first UK bookseller to go online, in 1995. Last year it introduced the Espresso book machine, which prints books on demand in the shop.

The firm now has 37 permanent shops and 40 that open temporarily on university campuses at the start of each term. Most outlets are near universities but there are six high-street shops offering a wide range of general books. The publishing arm was sold in 2007 to rival John Wiley, which was renamed Wiley-Blackwell.

According to the Employee Ownership Association, co-owned businesses account for 2% of Britain's GDP, with a combined annual turnover of more than £25bn, and the sector is growing. A research paper by the Cass Business School this year suggested staff-owned firms performed far better than shareholder-owned firms. They made decisions more rapidly, increased sales faster and created jobs quicker – but found it harder to raise finance. Joseph Lampel, a Cass professor, said they were also more stable in a downturn and should be encouraged: "In the current economic conditions, business leaders and policymakers should be looking again at the resilience associated with the employee ownership model – and how it could benefit the economy as a whole."

Andrew Hutchings, chief executive of Blackwell, said: "These changes will make Blackwell's stronger for the future; taking the company back to profitability and ensuring we retain a strong bookselling presence in universities and university towns across the country."

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